Indonesia recognizes both Indonesian arbitration decisions and international arbitration decisions. For Indonesian arbitration, contract parties generally choose BANI (Badan Arbitrasi Nasional Indonesia) to resolve their disputes as it is Indonesia’s primary arbitration institution. For international arbitration contracts parties in Indonesia often seek to resolve their disputes through SIAC (Singapore International Arbitration Centre), due to its convenient geographic location and its outstanding reputation.
Indonesian Arbitration through BANI
Even though the BANI rules have many similarities with the rules from most international recognized arbitration institutions, there are certain practices and procedures in BANI which are notably different and which might have a significant impact on foreign investors:
1. In general, BANI arbitrators can only be chosen from its own approved list. This list mainly includes Indonesian arbitrators. The availability of international arbitrators on the list is rather limited.
2. In special cases an external arbitrator may be appointed, upon approval of the Chairman of BANI. However, arbitrators from outside Jakarta are often not willing to take BANI appointments, because BANI arbitration tend to have regular hearings at weekly or bi-weekly intervals, and not all external arbitrators are willing to fly in and out of Indonesia regularly.
3. At BANI arbitration, the arbitration shall be performed at a venue designated by BANI, whereas in most international arbitration centers (including SIAC) the seat of arbitration may be decided by the parties.
Based on article 59 of Indonesian Law number 30 of 1999 on Arbitration and Alternative Dispute Resolutions the final award of BANI needs to be registered at the District Court within 30 days as of the award is rendered.
International Arbitration through SIAC
SIAC is the main arbitration hub for international arbitration disputes in Southeast Asia. This makes SIAC an experienced and more neutral venue to conduct arbitration, when being compared with BANI. Moreover the SIAC arbitration center is renowned for its world-class infrastructure, excellent support facilities and services. Aforementioned strong points of SIAC, in addition to the disadvantages of BANI as mentioned above, make SIAC the more favorable venue of arbitration for many foreign investors.
The recognition of an international award (such as an award from SIAC), faces more difficulties compared to the recognition of an Indonesian Arbitration award. An international award will only be recognized and may only be enforced in Indonesia after it has obtained a writ of execution from the Chairman of the Central Jakarta District Court. Recent cases show that foreign parties are experiencing considerable difficulty in enforcing foreign arbitration awards in Indonesia, due to the reluctance of the Indonesian Court to issue the writ of execution. In one of our next columns we will further elaborate on the enforcement procedure of foreign arbitration awards in Indonesia.
This column is provided by PNB Law Firm Jakarta